Md. ranks 41st on Tax Foundation list of state tax climates for businesses

Jamie Smith Hopkins, The Baltimore Sun

Maryland retained its tenth-worst ranking in the Tax Foundation's latest study of state tax climates for businesses.

The Tax Foundation, which released the latest of its annual rankings Wednesday, said Maryland's corporate tax rate is better structured than in many states — ranking 15th — and its sales tax made the top 10, in part because local jurisdictions don't have add-ons to the state rate. But the state's overall position was pulled down by its broader tax structure, including the rates it charges on individual income, unemployment insurance and property.

The foundation said all the states in the bottom 10 have "complex, non-neutral taxes with comparatively high rates." Maryland was also 41st last year, but it was in the middle — 22nd — seven years ago.

"A lot of taxes were increased, a lot of complexity was added," said Joseph Henchman, vice president of state projects at the Tax Foundation. "That's a fairly significant drop."

New York, New Jersey and California took the bottom three spots this year. The Tax Foundation ranked Wyoming, South Dakota and Nevada — which don't have corporate or individual income taxes — in the top three.

Several of Maryland's gubernatorial candidates — three Republicans in the race and Attorney General Douglas F. Gansler, a Democrat — have said they would cut some or all of the state's taxes. Gov. Martin O'Malley has defended the state's business climate, pointing to a No. 1 ranking in innovation and entrepreneurship by the U.S. Chamber of Commerce.